Cisco's Flip Business Closes; 550 Workers To Be Cut

Umi Home Telepresence Shifts into Business Unit As Part Of Consumer Realignment At The Networking Giant

Cisco Systems announced Tuesday that it is phasing out its portable flip-video camera as part of a restructuring program that eliminates the need for other consumer-focused businesses and reduced staff by 550 employees.

Flip Video UltraHD 8GB

More recently, consumer products have been a drag on Cisco, a $ 40 billion company that dominates the world of switching and routing. Three years ago, Cisco's executives had ambitious plans for the video, including consumer video and flip-flops, although participation in such a consumer market was an unusual step for an infrastructure maker.

Last week, Cisco CEO John Chambers told financial analysts that the company needed to cut spending by half. He made this announcement three days after publishing a sincere memo to Cisco's 73,000 employees about the upcoming changes.

Steps announced this week are steps in the House of Representatives plan to refocus Cisco's strategy to focus on five key areas: central routing, switching and services; Collaboration; IT architectures; Video and datacenter products.

In addition to some consumer-facing businesses, Cisco will reorganize its operations so that the remaining consumer offerings fall into one of the five priority areas, even though the consumption lines are not integrated into the data center area. As a result of the measures announced this week, Cisco said in a statement that it will charge $ 300 million in the third and fourth quarters of fiscal 2011, with 550 job cuts in the fourth quarter.

Cisco said that FlipShare customers and partners are supported by a transition plan, but do not provide details.

Cisco's home network is reoriented to "drive higher ROI and connectivity to its core network infrastructure". Products in this area will continue to be sold in retail channels.

Cisco's Umi Home Telepresence offerings are integrated with the Business TelePresence product line and are sold through a business and service provider approach, though the company does not explain how it would work. Cisco also did not say if it would continue to sell Umi consumer goods.

Cisco said it would "evaluate" whether it would integrate its business with Eos media solutions or find other market opportunities for this business.

It is ironic that Cisco kills the flip video camera, even though it has identified the video as one of its five priorities; apparently, this priority does not extend to the consumer side. "We are taking important and specific steps as we align the operations to support our network-centric platform strategy," Chambers said in the statement.

"As we continue our efforts, we focus on how we can help our business customers and service providers optimize and extend their offerings to consumers, and help ensure the network's ability to deliver on these offerings." Chamber said.

Cisco supported and improved the flip line a year ago. Among other things, the company has equipped the camera with HD features and advertised in advertising campaigns on the Web. There were even rumors that Cisco wanted to sell a Wi-Fi-enabled flip, but that did not happen and it's now unclear how long the company will continue to support the camera.

Cisco has taken steps to make Umi's telepresence products more affordable, and has been promoting the systems in national television commercials. However, analysts believe that the Umi product market will be limited.